The company’s ability to innovate

A realistic picture of the company’s ability to innovate

The realisation of an innovation ambition level revolves around the ability to translate the desired value proposition in concrete terms for the customer. The success of innovation is not determined by the innovators in the organisation. What matters is the degree to which the customers adopt the new value proposition!

A company’s ability to innovate is divided into four different (innovation) domains. Each domain has specific characteristics and makes its own contribution to the realisation of the innovation. The four domains are:

The Corporate strategic ability to innovate: the ability to translate the trends and developments into a new value proposition. This is a matter of signalling trends, building scenarios, gauging customer behaviour and above all translating all of this into product, channel and market features. It is an interaction of detailed knowledge and analysis in combination with the feel for customers and the market. This ability is called the “entrepreneurial gut feeling” of the organisation. Examples of companies that are able to translate trends successfully into new value propositions are the Swedish company IKEA (products), the British supermarket chain Tesco (channels), the Dutch beer brewer Heineken (markets) and the Canadian company Cirque du Soleil (new product, market and channel).

The External Network ability: the ability to organise different parties in the environment of the business and to realise common innovations. The external network ability is characterised by the viewing from different perspectives outside the organisation. Innovation is not exclusively an internal matter, intensive cooperation with external parties is crucial too. An example of this is so-called “co-creation” at Lego. Children (customer perspective) are actively involved in the development of new Lego “boxes of building blocks”. The children work with R&D over the internet (technological perspective), Sales & Marketing (market perspective) and Operations (business process perspective). The top three best-selling Lego boxes of building blocks have come about in this way. Successful cooperation requires structures and governance to be set up between the company and the external parties. These new structures are called Eco-systems and are mainly aimed at innovating collectively. Twente Care Services for example, the health care company of the Twente Hospitals Group, is also successful. It focuses on products and services that are closely associated with the key activities of the hospitals. The knowledge and experience deployed medically within the Twente Hospitals Group can be utilised with a consumer orientation through an eco-system of more than 30 different parties.

The Integral Governance ability: the ability to adapt the business model (structure and culture) to the development and realisation of the new value proposition. Characteristic is the viewing from different perspectives within the organisation. Involved in an innovation are not just R&D for example, but also other business functions such as Sales & Marketing and Operations. It is necessary for the business model and the governance methodology to support the desired flexibility and integration. Thanks to such a “Business Service Oriented” business model EasyGroup (EasyJet, EasyMobile, etc) has proved able to adapt quickly and easily to the different value propositions in the market, without losing the integral governance.

The Operational Acceleration ability: the ability to adapt processes, (technical) resources and competences to the development and realisation of the new value proposition. The concept of “Lean Solutions” shows how processes and technology fit seamlessly together as modules in different assemblies. A business with a huge operational acceleration ability is the American media group CNN.

The current and desired ability to innovate can be determined for each domain for a company.